August 2, 2013 - From the August, 2013 issue

Varun Sivaram on Powering LA City’s Future

Through determined investment in solar energy, Los Angeles is on track to generate a third of its power from renewables by 2020. Varun Sivaram, formerly Mayor Antonio Villaraigosa's senior advisor on energy and water policy and currently a Rhodes Scholar at Oxford, penned the following op-ed for TPR on the challenges LA faces in upgrading its energy infrastructure while meeting demand for renewables.


Varun Sivaram

"[LA] Mayor Garcetti should seek new ways to supply, store, and save energy to arrest both electricity rates and greenhouse gas emissions...We should not mistake clean power for cleantech, nor sustainability for innovation."

Today’s solar panel is neither new nor terribly exciting as a technology. In fact, the crystalline silicon solar panel, which comprises 90 percent of the market, is basically the same device that researchers at Bell Labs invented in 1954. The same goes for wind turbines, hydroelectric generators, and geothermal plants—none are novel by 21st century standards.

Through determined investment in these resources, LA is on track to generate a third of its power from renewables by 2020, making far and away the most impressive urban progress in the country. But we should not mistake clean power for cleantech, nor sustainability for innovation. Building on Mayor Villaraigosa’s superb environmental legacy, Mayor Garcetti should seek new ways to supply, store, and save energy to arrest both electricity rates and greenhouse gas emissions.

Such innovation is the only way to shake up the Department of Water and Power’s bleak rate forecast. By the end of the decade, electricity rates are projected to rise by two thirds, largely to pay for renewable energy, energy efficiency upgrades, and maintenance and replacement of aging infrastructure. This is not to fault LADWP—faced with state environmental mandates, the Department has rolled out an ambitious plan to replace 70 percent of LA’s power supply in a decade. Some cost is unavoidable in this complex operation, one which General Manager Ron Nichols likens to switching out the engine of a 747, midflight.

On top of all this, asking Mr. Nichols to inject dynamism into a conservative utility seems a tall order. But he’s responded to other impossible goals—transforming a Utah coal plant without actually owning it, finding common ground for a settlement at Owens Valley—with resourcefulness and ingenuity.

Now the challenge is to modernize the power system, leveraging technologies that promise huge cost savings. Batteries and compressed air energy storage can help solar and wind farms pull their weight as reliable generators, avoiding the dramatic costs of backup power plants for when the sun stops shining or the wind stops blowing. New power electronics can shrink the footprint of electrical substations and better handle renewable energy. And LADWP would gain from “demand response” technologies that signal customers to reduce their power use when demand is high and generation is expensive. As the utility moves beyond inexpensive coal power, the cheapest kilowatt-hour is the one we don’t use.

LADWP recognizes all these benefits—but the organization isn’t built to realize them. Prevailing industry wisdom advocates a race to be second, waiting for someone else to field-test technology; however, this approach deprives LADWP of valuable learning and preferential supplier deals even as utilities around the world race to pilot grid-scale batteries. Even if basic research is outside its core competency, LADWP should create a technology transfer division, a central unit that would reach out to companies and laboratories, evaluate exciting technologies, and deploy them on small parts of LADWP’s vast power system.

The division can build on LADWP’s partnership with the La Kretz Innovation Campus (LKIC) soon to be built downtown. Close collaboration could lead incubated companies to develop tailor-made technologies that slot into LA’s power system. However, LADWP should resist the temptation to recoup its investment in the LKIC by extracting equity or IP royalties from the start-ups, a toxic signal that hampers competition with Silicon Valley for the best entrepreneurs.

And if just partnering with start-ups makes the utility too nervous, there are established, credible companies with innovative solutions to offer LA. For example, Microsoft implemented a futuristic energy efficiency nerve center at its Redmond headquarters and could accelerate LA’s progress toward its goal of reducing energy use 10 Percent by 2020. Microsoft is poised to launch CityNext, a public sector initiative to modernize city functions, and LA should certainly sign up as a pilot city.

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Finally, innovation doesn’t always look like gadgets—in fact, some of the most exciting future opportunities require Angelenos to embrace new models of payment to enable distributed generation. This refers to generating electricity right next to where it’s used, encompassing onsite fuel cells at the Port, cogeneration at hospitals, and rooftop solar panels. Distributed generation can improve reliability, make us more economically competitive, and reduce our carbon footprint—but under our current rate structure it threatens the public goods provided by LADWP. To expand distributed generation, we need to adapt the billing model so small generators pay their share of the power grid that we all rely on.

There’s a good reason that LA’s solar panels don’t push the gizmo envelope—60 years of development and Chinese manufacturing prowess have made the old devices cheaper than ever. And that’s just fine, because not all aspects of the power system should be replaced with new technology. Judicious innovation and hardheaded investments compose a business case with which the Ratepayer Advocate could get on board.

Because although we’re a little late entering the 21st century, what’s most important now is that we do it right.

© 2014 The Planning Report | David Abel, Publisher, ABL, Inc.